On The Road Lending
On The Road Lending

BETTER CAR BETTER JOB BETTER LIFE

  • Client Referral Incentive Program

    Goal to increase the reach of On the Road Lending to people who can benefit


    Goal to increase the reach of On the Road Lending to people who can benefit

    We’re incredibly grateful for our clients, so we came up with a way to reward them while increasing our reach and ability to help others!

    Our program gives clients $25 with each referral along with at least one entry into a yearly drawing. See the details below:

    Rules: In order for the referring person to receive cash payments and earn entries into the prize drawing, the referred client must complete the intake and pay application fee. Upon receipt of the application fee, OtRL will issue a check to the referring party and record the referring person’s entries for the prize drawing. Tallies and earned entries will accumulate for one year and the drawing for prizes will be held once per year at the Client Appreciation Event.

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    PRIZES

    Grand Prize: Flat Screen TV

    1st Prize: $250 Gas Gift Card

    2nd Prize: $200 Grocery Gift Card

    3rd Prize: $100 Grocery Gift Card

  • Community Innovation Project Invests $3 Million in Four Game-Changing Nonprofits

    Four local awardees leverage workforce-related solutions to disrupt persistent social issues


    Four local awardees leverage workforce-related solutions to disrupt persistent social issues

    April 19, 2017 – DALLAS – ORIX Foundation has announced a $3 million investment into four local nonprofits that are leveraging innovative, workforce-related solutions to disrupt persistent community challenges from poverty and unemployment to child abuse and neglect. The foundation, led by employees of Dallas-based financial services company ORIX USA, created the Community Innovation Project in response to a $3 million contribution from ORIX USA.

    Community Innovation Project awardees include: Cristo Rey Dallas College Prep and Paul Quinn College, which help economically disadvantaged students change the trajectory of their lives through work-study programs with Dallas employers; On the Road Lending, which helps the working poor address transportation barriers to long-term employment and financial stability; and Community Partners of Dallas, which is seeking to improve protections for abused and neglected children through a privately funded work environment to support and retain Child Protective Services (CPS) caseworkers.

    “These are all creative, problem-solving organizations that are willing to think differently and break with the status quo to better serve the Dallas community,” said Jim Dunn, who chaired the Community Innovation Project task force for ORIX Foundation and is President of ORIX Real Estate Americas. “Since we, as ORIX employees, better the community through our workplace, we were drawn to the idea of supporting transformational work experiences to further social change.”

    The Community Innovation Project awards include:

    $1 million to Community Partners of Dallas to fund a home base for CPS caseworkers. Last year a report showed that Dallas County CPS workers quit at annual rate of 57 percent. High turnover has led to prolonged time in investigating initial child abuse allegations, neglect in working cases, as well as dozens of other issues that affect the children served. As the state-designated charity partner for CPS in Dallas, Community Partners of Dallas is creating a new, privately funded space for caseworkers that will be the first of its kind in the country. For caseworks accustomed to working out of their cars or in crowded cubicles shared with multiple caseworks, this space will help create a positive work environment and collaborative hub for working with peers to protect abused children

    $500,000 to Cristo Rey Dallas College Prep for a new center to expand its Corporate Work Study Program. Cristo Rey Dallas offers economically disadvantaged high school students the opportunity to gain real-life business skills and character-building experiences from local employers while earning the majority of their tuition. Cristo Rey Dallas opened in Pleasant Grove in 2015, and provides a quality college preparatory experience to students in an area where poverty is pervasive and less than half of adults over 25 have graduated from high school. The Cristo Rey model combines education and work experience to change the trajectory of low-income students’ lives at 32 schools nationwide, with 90 percent of its graduates admitted to college. The work-study program connects students to paid jobs with more than 70 of Dallas’ top companies – exposing students to prosperous employment opportunities across North Texas and encouraging them to pursue educational opportunities in these higher income careers

    $500,000 to On the Road Lending to expand its Keys to Empowering Yourself (KEY) transportation program. This one-of-a-kind program offers reliable, low-interest vehicles and intensive financial coaching for vulnerable clients taking their first steps toward financial stability. Lack of transportation is reported to be the number one reason people lose their jobs, and public transport is often inaccessible in economically disadvantaged parts of Dallas. Funding from the Community Innovation Project will provide capital for low-interest vehicle loans for quality used cars under warranty, as well as financial coaching for those participants. The KEY program empowers individuals to avoid predatory loans, get and keep jobs, become more financially stable and have a healthier, better quality of life.

    $1 million to Paul Quinn College for its Work Program. This program gives urban students, primarily from low-income backgrounds, real-world work experience while enabling them to contribute to their college tuition without sacrificing their academic performance. Paul Quinn College is the only urban Work College in the United States, and its New Urban College Model has the potential to become a national standard. The school has been recognized for being an anchor institution for its students and a workforce pipeline for employers, while reversing unemployment, dropout rates and student debt trends.

    ORIX Foundation received an overwhelming response to its call for game-changing ideas to disrupt persistent community issues, with 164 applications submitted and vetted by a committee of ORIX employees over a nine-month period. This is the first innovation-focused grant opportunity from the employee-driven foundation, which has committed over $10 million in other grants to nonprofits since 2009, primarily in ORIX USA’s headquarters region of North Texas.

    To learn more about the Community Innovation Project awardees as their projects progress, follow ORIX Foundation’s Facebook page or visit orixfoundation.org.

    About ORIX Foundation ORIX Foundation is a nonprofit foundation sponsored and managed by ORIX USA Corporation and its employees to advance education, strengthen communities and improve lives. The foundation awards direct grants to not-for-profit organizations and matches the charitable contributions and fundraising of each ORIX USA, RED Capital and Boston Financial Investment Management employee up to $10,000 each year. Since it was founded in 2009, ORIX Foundation has committed over $13 million to nonprofit organizations primarily in ORIX USA’s headquarters region of North Texas.

    About ORIX USA Corporation ORIX USA, a subsidiary of ORIX Corporation, provides innovative capital solutions that clients need to propel their business to the next level. Based in Dallas, ORIX USA has a team of more than 700 employees spanning 20 offices across the U.S. and Brazil. ORIX USA and its family of companies offer investment capital and asset management services to clients in the corporate, real estate, municipal and energy sectors, while holding $6 billion of assets and managing an additional $29 billion, approximately. For more information on ORIX USA, visit www.orix.com.

  • Our impact investment loan fund now designated as CDFI

    After rigorous process, designation awarded by US Treasury


    We’re excited to announce that our impact investment loan fund, which provides below-market interest rate loans on good vehicles, has been designated by the US Treasury as a Community Development Finance Institution (CDFI). This prestigious designation is not easy to obtain and is only granted to specialized organizations offering financial products and services to benefit low-income communities and other target populations, in our case, African Americans and Hispanic families and individuals.

    The people we seek to serve have difficulty purchasing reliable transportation without being taken advantage of by predatory lenders. They often buy poor quality cars with bad loans because of a lack of credit, financial knowledge, or an understanding of the car-purchasing process. The partnership between our services arm, On the Road Lending, and OTR Fund I, LLC, our first loan fund, is a deliberate strategy to help these clients overcome this situation. Although two separate entities, they work closely together to provide an integrated suite of benefits for the people we serve, including long-term financial coaching, vehicle services, and good loans.

    Our goal is for people to build stronger lives and better health (physical, mental, emotional and financial). We want everyone to be able to access and retain the best job possible, overcome food deserts, obtain good medical care, access education options for their children, build assets and credit, and be on the road to a better future.

    To learn more about CDFI Certification, visit their website.

    To learn more about OTR Fund I, click here.

  • DART closes bus stop in NE Dallas

    Shut down an effort to combat crime


    Shut down an effort to combat crime

    Recently, DART closed a bus stop at the intersection of Forest Lane and Audelia Road. The stop was shut down in an effort to combat crime in the area.

    Many residents were already avoiding the bus stop because of the crime, but according to DART spokesman Mark Ball this stop was one of their busiest locations. And while there hadn’t been reports of crime on the DART buses, the shutdown of the location was an effort to work with the community.

    “We know they are attempting to fight the bigger issue of crime and we wanted to be part of the solution,” Ball said. They’ll now direct people to use bus stop to the north and the south — both about 5 minutes away.

    While we can understand why this is the resolution to the issue, we can’t help but wonder about the families and individuals who are affected by the bus stop closing. It’s easy to say the other bus stops are only about 5 minutes away, but there are too many people who can’t afford to extend their commute that’s already too long.

    Additionally, if DART shuts down one of its busier stops because of crime, what does that say about public transportation? We’re not saying it’s the most dangerous option, but we can certainly say that on top of being unreliable, it’s certainly not the safest option for Dallas families.

    What do you think of DART closing the stop at Forest Lane and Audelia Road? Is it an acceptable solution to the crime issue?

    DART Stop Shut Down Due To Crime In The Area

    NE Dallas DART Bus Stop Closed Due To Crime

  • Co-workers surprise teen with car

    Inspired by 10 mile walk to work


    We can never get enough of heartwarming stories like this one:

    An Alabama teen who walked 10 miles to work was brought to tears when his co-workers surprised him with a car.

    Who wouldn’t be impressed by a work ethic like Derrick Taylor’s? For more than a year, he’d wake up in the middle of the night and walk 5 miles in order to make his 4 a.m. shift at UPS. The job pays 11.90 an hour, and because the money goes towards his ailing mother, there was no way Taylor could afford a vehicle. Thankfully, his co-workers took notice, raising $1,100 to buy him a car of his own.

    “The group here, we’ve got some good news for you. Everybody came together and you don’t have to walk no more. You’ve got your own ride,” co-worker JD Ward told Taylor as he presented the Jeep Cherokee to the 19-year-old in an emotional video. (Seriously, we dare you not to cry — watch the video below!)

    The team also gave $300 to go towards liability insurance.

    “If I could, I would go around and thank everybody one by one,” Taylor said. “This is really going to change a lot for me, so thank you again.”

    Coworkers Buy Car for Amazing Teen Who Walks 10 Miles to Work Every Day

    Co-workers buy car for teen UPS employee who walks 10 miles to work

  • Abbreviated schedules affect those who rely on public transportation

    DART's holiday schedule reminds us of our mission


    DART's holiday schedule reminds us of our mission

    This holiday season, we were reminded why we do what we do here at On The Road Lending. We never get tired of hearing from our clients on how having a car has led to happier lives or seeing their faces when we hand them the keys, but this special reminder came in the form of an email from DART.

    The email, which we assume went out to all DART users, detailed the Christmas holiday schedule. It explained that they’d be running on an abbreviated schedule (which included one system, TRE, not running at all on Christmas Day as well as the closing of certain offices) for the holiday weekend and that people who use the public transport system should plan accordingly.

    And while we appreciate the fact that DART workers had the chance to take a break and enjoy their time at home during the holidays, we can only imagine how hard this must be for those who rely on public transportation to get to and from jobs, especially those whose work retail jobs with extended holiday hours. How can they commute in a safe and efficient way if they can’t even rely on their only mode of transportation? What does planning accordingly actually mean for these people? Going to work much earlier than usual? Taking a pricey taxi or rideshare to get to their destination?

    We’re working to make sure people in our community have transportation they can rely on. And the truth is that it won’t happen until they have a vehicle of their own.

  • A Heartwarming Story

    Repo man pays off car and returns it to couple


    Repo man pays off car and returns it to couple

    We love that the holidays are a time to give, receive and reflect on the things we’re thankful for. So we couldn’t help but share this story that warmed our hearts this holiday season.

    As a repo man in Illinois, Jim Ford had seen his share of hairy situations — he’d even been shot at while repossessing a car. But luckily, the encounters never turned him into a bitter man — because a bitter man would never pay off an elderly couple’s car he had to repossess.

    Stanford and Patty Kipping had a hard time keeping up with car payments on their 1998 Buick thanks to a fixed income, high prescription costs and other bills. So Jim did everything he could to help them keep their car. And we mean everything — not only did he let them know he was taking their car so that they could remove their personal items (a courtesy he extends to most), but he also tried to work with the bank to make a deal that would allow them to keep the car.

    When that didn’t work, Jim took matters into his own hands and created a GoFundMe page to raise money for the Kippings car. In one night he raised more than $3,500, which easily covered the $2,501 the bank owed on the Buick. On top of that, a friend of his fixed up the Buick by topping off the radiator, changing the oil, and fixing the headlights.

    And what did Jim do with the rest of the money? He put $1,000 in an envelope and gave it to the Kippings. They called the situation “a miracle come true” and we couldn’t agree more.

    “I may be getting soft in my old age but you get more done with kindness,” Jim said about how he treats people he comes in contact with through his job. That’s a mantra we hope to keep with us throughout the holidays and beyond.

    Read more: Repo man felt terrible taking elderly couple’s car. So he paid it off and returned it

  • 5 Reasons to Support On The Road Lending on North Texas Giving Day

    Support us on 9/22!


    North Texas Giving Day is on September 22, and we couldn’t be more excited to participate in the event. We had a great show of support last year, and we’re hoping for even more this year.

    We know there are so many great nonprofits you could give to on North Texas Giving Day, so here’s why we think you should consider supporting us to help people in our community get on the road to a better car, better job, better life.

    1. Reliable transportation is a serious problem

    We’ve talked to countless people whose commute is three times (more in many cases) what it should be because they take public transportation. What happens when a bus is late? Or a train breaks down? When your livelihood is based on something that’s completely out of your control, there’s a chance things won’t end well.

    If you have a vehicle that you drive every day to get to work, drop your kids off at school, even go to get groceries, we recommend putting yourself in the shoes of someone who doesn’t have a car. How would you get to where you need to go? How inconvenient would it be for you? How much would it affect your life?

    2. The lack of reliable transportation really affects employment

    When transportation isn’t reliable, neither is the individual in an employer’s eyes. Whether a person is late to an interview or constantly late to work (because of a missed bus, late train, etc.), it just looks bad. A car can be the difference between having a job and not having a job. It’s the difference between having the money to support the family and not having the money to support the family. The lack of reliable transportation is a big reason why perfectly capable people lose their jobs.

    3. Predatory lending is not OK. Victims need an ally

    Imagine paying $10,000 for a car that’s worth less than half of that. It’s exactly what happens to people who buy cars through predatory auto lenders. They’re sold old cars (that have likely had multiple owners — don’t get us started on that!) at extremely high interests. And when they default on those loans, which so many do, the car dealer can just repossess the car and resell it for the same price.

    It’s almost as if the lenders are preying on low-income individuals and banking on them to fail so that they can make more money.

    … OK that’s exactly what’s going on. And that’s exactly why we’re here. We are that ally.

    4. We work with clients on financial responsibility first

    We all know the quote: “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”

    This is something we believe strongly in at On The Road Lending. That’s why we work with our clients for several months to build financial capability first and then arrange an affordable loan through our private-equity loan fund.

    5. A car does not equal the end of the relationship

    Handing off those keys doesn’t mean we say goodbye to our clients. Rather we keep the relationship going through the life of the loan. That’s five (often more) years of providing financial support and mentorship. (Plus, we really love our clients and want to make sure we continue to be a part of their lives!)

    We hope these 5 reasons have helped you see more of what we do and why we do it, and we hope you’ll support us on North Texas Giving Day. Click below for a link to our page.

    North Texas Giving Day - On The Road Lending

  • We're participating in North Texas Giving Day!

    Get up and give on Sept. 22


    Get up and give on Sept. 22

    In the coming weeks, you’ll see countless emails, Tweets and Facebook posts about North Texas Giving Day — September 22, 2016. Last year Communities Foundation of Texas raised $33 million on North Texas Giving Day through more than 118,000 gifts benefiting 2,020 nonprofits. We’re proud to again be a part of this community-wide effort that prompts North Texans to “Get up and give!”

    To be honest, it’s hard for smaller nonprofits like On the Road Lending to compete with the Goliath agencies that have large constituencies and marketing budgets for this annual effort. But we do have something that many nonprofits don’t have—our work has far-reaching impact on a wide variety of issues.

    Whatever issues are important to you, we ask you to think about the vital solution that an affordable, reliable, fuel-efficient car provides:

    If you support education efforts, consider whether a low-income family can actually get their child to the better school if it takes three hours on a bus or train.

    If you support job-training programs, consider whether a person can actually get to their better job if they live in a transit desert.

    If you support health and hunger projects, consider how likely a person is to get good food or sufficient healthcare when the nearest grocery store or medical facility is miles away.

    If you support domestic violence agencies, consider how a woman can escape a batterer if she doesn’t have a car.

    If you support clean initiatives, consider the positive effect of replacing older, gas-guzzling, polluting cars with newer, fuel-efficient models.

    These examples are not theoretical. With your support, On the Road Lending clients and their children will have better cars, better jobs and better lives.

    On the Road Lending partners with many of the organizations you care about most. When you make your gift to the organizations you believe are making a difference in North Texas, think about how a better car and an affordable loan can help the people those organizations serve.

    Chances are those agencies have already asked for our help because lack of transportation is a major barrier to their clients’ success.

    On North Texas Giving Day, when you donate to the nonprofits you regularly support, please also consider a gift to On the Road Lending to make their work even more meaningful.

    View On The Road Lending’s North Texas Giving Day page HERE.

  • John Oliver took on the auto-lending industry

    5 things that stood out


    5 things that stood out

    On Sunday August 14, something awesome happened. On his show Last Week Tonight, John Oliver took on the auto-lending industry … hard. If you’ve ever wanted raw and honest insight into why we do what we do, look no further. Oliver really nails it, standing up for those whose voices need to to be heard and whose stories are all too common.

    We can’t stop thinking about this awesome piece, so we thought we’d share 5 things that stood out to us while we watched.

    1. Most Americans need cars OK, this is something we knew already. Not every city is equipped with a top-notch public transportation system. We see so many instances where a commute that should take less than 30 minutes takes hours because of sub-par public transportation options. Look no further than the recent Dallas Morning News article on Ms. Burch, whose commute to and from work is no longer 4 hours thanks to her new-to-her car.

    2. Lenders target Individuals with poor credit Think about some of the commercials you see on TV for used cars, or even pay-day loans. Who are they talking to? They talk of no credit, poor credit, bankruptcy. That way they can hike up the interest rates. They act like they’re doing the buyer a favor. But in reality, they’re making money (and lots of it) off the buyer whether or not they can keep the payments up.

    3. One car can have many owners Oliver cited a 2011 Los Angeles Times article, which investigated the journey of a 2003 Kia. They found that in three years, the car was owned by eight different people. On top of that, every time the car was resold, it was sold at a “price double or even triple its Blue Book value.” This leads us to the next point…

    4. Defaulting: Bad for the buyer, good for the lender Defaulting means a car can be repossessed (or even turned off) at any time since the lender has total control of the vehicle. It’s obviously an awful thing for individuals and families who rely on cars for their livelihood. But, like we said before, all lenders have to do is get the car back and re-sell it. That means a new down payment, a higher-priced car and those same high interest rates. Defaulting means more money for the lender.

    5. “…when you are poor, everything can be more expensive” This was a line in the piece that really stood out to us because of how true it really is. The idea of taking advantage of those among us who cannot afford it breaks our hearts. High interest rates means someone could end up paying more than $10,000 on a car that’s worth about half of that. In what world does that make sense? Not in ours, and that’s why we’re trying to change things.

    If you have a little time, we encourage you to check out John Oliver’s piece on the auto-lending industry. He has some choice words in it (it is on HBO, after all), but like we said before it’s honest and raw. And as Newsweek said, “John Oliver is at his best when he is exposing industries that take advantage of lower-income Americans.” View the video below.

    Newsweek: John Oliver says sub-prime auto loans are eerily reminiscent of the housing crisis

    Los Angeles Times A vicious cycle in the used car business

    Dallas Morning News Donors help solve woman’s 4-hour, 3-vehicle DART commute, but problems remain for many in southern Dallas

  • Self-driving cars: Our concerns were confirmed

    Fatal crash involving Tesla in autopilot


    Not too long ago we wrote a post on the innovative idea of self-driving cars. We were cautiously inquisitive about a future where cars drive themselves, asking questions like, “If we have a split second to decide between hitting a person or animal in our path with swerving off the road and into a tree, how does a driverless car make that decision?” There are decisions that are hard (if not impossible) for us to make as drivers, so how can we expect a computer to make them?

    It turns out we were right to be concerned. On May 7, there was a fatal crash in Florida between a Tesla in autopilot and a tractor trailer. Joshua Brown, an entrepreneur from Ohio, was killed when the Tesla failed to apply brakes to allow the tractor trailer to make a left turn.

    Currently the National Transportation Safety Board and the National Highway Traffic Safety Administration are both investigating the incident and trying to get to the bottom of why this happened. “Neither Autopilot nor the driver noticed the white side of the tractor-trailer against a brightly lit sky, so the brake was not applied,” Tesla said in a statement released recently.

    On top of all of this, Tesla is looking into a more recent crash that took place in July in Pennsylvania that may have also been a result of the autopilot feature. (Tesla says there’s no evidence that points to autopilot, but the police contend that the driver said the car was in autopilot.)

    Our concern here is that since Tesla has put the autopilot feature in all of its cars, there’s no real way to test it out in a controlled environment. Instead of testing in private, like most other companies, they’re testing with the public. And while autopilot is disabled in all the cars — drivers who want to use autopilot must first enable it and check a box saying they’ll “maintain control and responsibility” of the vehicle — we can’t help but feel like this is a dangerous way to beta test a product. It’s not like a new iPhone app, people’s lives are at stake here.

    What are your thoughts on the technology of self-driving vehicles? We know it’s inevitable, but should it be tested privately first before it goes public?

  • Car Registration Renewal and Child Support

    Texas plans to link the two this winter


    The Texas Attorney General’s Office has come up with a new way to penalize those late on child support payments. Starting this winter, they’ll be pursuing an initiative that will block vehicle registration renewals for parents who are behind on payments. This will be in effect for Texans who are six or more months late on child support starting with December registration renewals.

    And because the Texas Attorney General’s Office has the power to institute this initiative without corresponding legislation, they can legally revoke registrations without due process. Adding this to the fact that the office is already able to revoke driver’s licenses (professional and recreational licenses, too), we can’t help but wonder if this is an idea that only looks good on paper.

    We believe that child support payments need to be paid for the sake of the children. But doesn’t taking away transportation to a job create a larger roadblock to turning in payments? There are countless reasons why child support goes unpaid for six months or more. One of the more common reasons? Because the parent can’t afford to pay, not because the parent is purposely refusing to pay or avoiding it.

    Another concern is that the initiative will only apply to vehicle registration renewals. This means that it won’t be enforced on new vehicle registrations and might mean the initiative will disproportionately affect lower income populations.

    In our opinion, this is an initiative with good intentions and potentially rough consequences for people who are already in unfortunate circumstances.

    What do you think about revoking registration renewals for people behind on child support payments — good idea or bad idea?

    Texas to Tie Car Registration Renewal to Child Support

  • PEER-TO-PEER LENDING

    How well does industry disruption serve the consumer?


    How well does industry disruption serve the consumer?

    Financial technology companies, so-called “FINTECH,” have received a lot of venture capital funding in recent years. One area that has been of particular interest is that of peer-to-peer lending, whereby companies, such as Lending Club and Prosper, connect investors (lenders) with consumers (borrowers) to facilitate loans on-line. These companies function as financial intermediaries, as an alternative to banks, credit unions, and other financial services companies. Because they offered high returns, the companies grew quite large. Marketplace lending grew by 700% in the past four years. But both companies have faced significant recent challenges, including loan losses, that have dropped their volume and value, leading some to question the business model.

    The model is a bit complicated, involving many entities, including a traditional bank and several intermediaries. Consumers apply on-line and are assigned a risk rating based on their credit scores, debt-to-income ratios, and other inputs. The borrower’s loan is put on-line through these platforms and made available for individual investors to select and they are paid a return, commensurate with the risk. In theory, this marketplace enables an individual borrower to connect with an individual lender. The practice, however, has drawn much more large-scale institutional capital, than small investors. The majority of these loans are personal, unsecured credit. Contrary to the name, peer-to-peer, there are a number of entities involved in each transaction, all of which take some form of fees that provide their revenue, so borrowing costs are actually fairly high in comparison to traditional loans. As with payday loans and subprime auto loans, marketplace lending tends to attract less creditworthy borrowers, who typically use traditional financial products.

    Half of Lending Club’s stock value was erased last month when founder and CEO, Renauld Laplanche, was recently fired for falsifying loan data. In a consumer lending business, transparency and accountability are critical to maintaining confidence. Shareholders do not like news like this. Lending Club has also suffered from an influx of competition, including Prosper.

    Prosper’s problems are not malfeasance, but a struggle to find investors to buy their loans. Their investor demand has dropped significantly in the past two quarters and they have been forced to lay off 28% of their employees.

    While capital markets are strongly attracted to companies that are “industry disruptors,” particularly those with a technology platform, these companies’ troubles raise concerns about whether innovation really works all that well for the consumer or the shareholder. Default rates for these products have been fairly high, with industry losses of over $34 million last year. The reality is that it is expensive and time-consuming to assess borrower quality in the optimal way – using character-based lending and other tools besides just formulaic risk scoring models. Bringing borrowers and lenders (investors) together can work very well in an organization like On the Road Lending. Ironically, in peer-to-peer lending, the distance between the two gets fairly large.

    Prosper shuts off access for borrowers

    Final Days of Lending Club CEO

  • Killing the Payday Loan Business

    Can we regulate our way out?


    Can we regulate our way out?

    Ask most financially sophisticated people and they will tell you that payday lending is predatory and morally wrong. These products are designed to provide immediate cash to a person who has no other options, thus taking advantage of a desperate situation. Relief of an urgent need is the entire driver of the business model. Regrettably, nearly half of all Americans are likely purchasers of these products and services. The Atlantic Magazine ran a recent cover article called “The Shame of the Middle Class” that says that 47% of Americans could not access $400 if they needed it in case of emergency. This is a crisis for our country and we all, collectively, have a moral obligation to restructure our complex economy to incentivize greater financial security for our citizens.

    If you talk with users of these non-traditional financial systems, however, you may get a different perspective. For many low-income people, use of payday lenders is an unfortunate reality and it is not uncommon to hear them say they don’t want the services to go away because they have nowhere else to turn. They often understand that these services are taking advantage of them and they may feel ashamed at having to use them, but there is no other option.

    The Consumer Finance Protection Bureau is taking aim at this industry. Their proposed new rules would require a radical change in how payday lenders operate by requiring these companies to underwrite their borrowers in a more traditional way, effectively requiring them to evaluate whether this loan will benefit the borrower more than it will harm them. The industry says this new requirement will cripple it. Requiring them to pull credit reports and take the time to evaluate a loan in the manner that normal lenders do will greatly increase their costs, meaning that the cost of these loans – already in the triple and quadruple digits – will increase. As a character-based lender that works with weak credit clients, we do understand that evaluating a person’s creditworthiness, particularly when credit scores are not the basis for the loan (as in our case), takes a greater deal of time and expense than just handing someone cash and taking their bank account information. There is no question that the business model of payday lenders will radically change, which, of course, is the intent of the CFPB.

    While some articles have posited otherwise, there is no question in our minds that predatory lending is highly profitable. Many mainstream companies publicly take moral objection to the practice, but in looking at stock offerings and annual reports, we have found many of them are investors in these companies. The returns are just too great. The Journal has run several articles recently on Google banning payday lending ads, while simultaneously being an investor in LendUp.

    Efforts at the municipal level to regulate predatory lenders have typically been in the form of zoning control. The response by these lenders has been to change the terminology of their products and services so that they can avoid the classifications in the tighter zoning regulations. The industry finds a way to maneuver, no matter what is thrown at it. When half of all Americans are potential customers for a very lucrative business, the financial temptation is more than enough to overcome the moral objection.

    It remains to be seen what the consequences of this new regulation will be. At On the Road Lending our approach has been to offer a lower-cost, socially conscious option for consumers. Not only do we provide consumer-beneficial car loans, we also ensure that our clients have an extended warranty on their vehicles so that they avoid the financial shocks that come from unexpected auto repair bills. This is often what drives consumers to payday loans. In addition, our clients have, on average, $150 more in cash because of their reduced expenses each month and many of them manage to save.

    It has proven difficult to regulate our way out of predatory lending in our society. Our strategy is to crowd them out by offering a market-based alternative.

    WSJ Payday Loans a Crony Capitalist Target

    NPR CFPB Rules to Ban Payday Lending

    The Shame of the Middle Class

    Google Payday Lending Ban

  • Self-Driving Cars

    Not your average traffic stop


    Not your average traffic stop

    Last month, a Mountain View, California policeman noticed that traffic was piling up behind a little white car. The car was only going 24 miles per hour in a 35 mph zone, so he decided to pull it over and talk with the driver. There was just one problem. There wasn’t one.

    Google has logged over a million miles on California roads since 2009 testing its driverless concept cars. Forecasters predict that these cars will be on the roads in most major cities within only three years and many companies are pursuing their own versions – Google, Apple, Tesla, and many mainstream manufacturers.

    There have been a lot of questions raised about driverless cars, but the most compelling deal with how the technology interacts with a human world. If we have a split second to decide between hitting a person or animal in our path with swerving off the road and into a tree, how do we make that decision? How does a driverless car make that decision?

    It will be interesting to see what happens with this idea. It would seem, given the proliferation of distracted driving – it seems now that almost every car you see is being driven by someone staring at their phone instead of the road – that driverless cars would reduce accidents. Will people embrace them? Do they offer a way for people to relax and read the paper on their way into work like people who ride mass transit do? Will they be affordable enough that an average person can afford one? Will they become widely used? Time will tell.

    We more often read about the fact that driverless cars are programmed too perfectly, that they obey the traffic laws better than humans do. But what happens in the case of this traffic stop? If a car driven by a human would have been given a ticket for driving too slow, what happens with a car not driven by a human? Who gets the ticket?

    Google Car Stopped for Driving too Slowly